“I hope it is not an indication of the way the forthcoming exit negotiations are going to be conducted.

“Mr Schauble is just worried that the German exchequer is going to have to pay in more to make up for the withdrawal of British money.”

Britain is expected formally to leave the EU in 2019 after two years of negotiations are complete.

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Last year Britain paid £8.5 billion into EU coffers

Last year alone, we made a net payment totalling £8.5billion to Brussels.

Mr Schauble’s remarks came in an interview in yesterday’s Financial Times.

They followed a call from France earlier in the week for Britain to “pay a price” for voters’ decision to quit the EU.

Mr Schauble also insisted Britain could not curb immigration from EU countries and remain a full member of the single market.

He said: “There is no a la carte menu. There is only the whole menu or none.

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Mr Schauble also claimed Britain can do nothing about immigration

“Without membership of the internal market, without acceptance of the four basic freedoms of the internal market there can, of course, be no free access for financial products.”

His outburst follows reports that EU officials are preparing to demand an exit fee of up to £60billion from the UK.

In response to the German finance minister’s remarks, a Downing Street spokesman said: “We have always set out that as long as we remain members of the EU, we will fulfil the commitments and obligations to the EU. What happens once we have left the EU is a matter for the negotiation process.”

Chloe Westley, a spokeswoman for the anti-Brussels pressure group Change Britain, said: “The British people voted to leave the EU because they think it costs too much and are tired of being told what to do by politicians they haven’t heard of and didn’t elect.

“Mr Schauble may make statements like these for the benefit of the public, but in private he knows that it is in both Germany and the EU’s interests to strike a good deal with Britain. “Outside of the EU’s single market we can spend our money on our priorities like the NHS instead of sending billions in taxpayers’ money to the EU.

The Prime Minister said the meeting was an opportunity to update the Chancellor on Britain’s Brexit preparations.

She said: “Our work is on track – we stand ready to trigger Article 50 by the end of March next year.

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The Government will not be curbed by the EU's threats

“I want to see this as a smooth process, an orderly process, working towards a solution that is in the interests of both the UK but also in the interests of our European partners too.”

Mrs Merkel repeated their agreed position that detailed talks on Brexit will not begin until after Article 50 of the Lisbon Treaty – the formal mechanism for leaving the European Union – has been triggered.

Following the talks between the two leaders, a Downing Street spokesman said: “They agreed that we should seek ways to strengthen the links between the people of the UK and Germany, both while we remain in the EU and once the UK has left.”